The Actual Operation of an Internal Control System May Be

question 103

Multiple Choice

The actual operation of an internal control system may be most objectively evaluated by:

• A) completing a questionnaire and flowchart related to the accounting system in the year under audit.
• B) substantive tests of accounts balances based on the auditor's assessment of internal control strength.
• C) selection of items processed by the system and determination of the presence or absence of errors and control test deviations.
• D) review of the previous year's audit work papers to update the report of internal control evaluation.

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Definitions:

Long-Run Real Wages

The earned wage adjusted for inflation over a period in which all inputs, including labor, can be fully adjusted in the market.

Demand for Labor

The total amount of workers that employers are willing and able to hire at a given wage rate in a specific labor market.

Supply of Labor

The total hours that workers are willing and able to work at a given wage rate.

Wages

Remuneration provided to laborers for their services, usually based on an hourly, daily, or task-completion method.